Thursday, November 24, 2016

Anuj: I remember when I can to Chiang Mai to interview you, you said you would vote for anyone but Hillary Clinton. You would be a happy man today.

A: Yes, and I still would do the same.

Latha: But what do you do as a stock picker? This evening would you be looking at buying any of the emerging markets, developed markets? What are you doing with your money today?

A: I am not interested in today. When I invest money, I am interested in the next 5-10 years and I told you always over the last two years, I would rather invest in India than in the United States, which is an over-valued, over-promoted market. I would also rather invest in other emerging economies and in Europe than in the US.

Sonia: So, since you mentioned that you would invest in India rather than other economies, I wanted to ask you if you have been following the latest news flow that we have about the clamp down on black money that we had overnight. How much of a positive do you think it could mean in the longer run for India?

A: It is negative in the longer run. I do not believe the big corruption comes from bank notes. The big corruption is like Hillary Clinton, she carries around suitcases.

Latha: But do you expect there is going to be any protracted downturn since the markets were not prepared for a Trump victory. Are we going to see protracted, in terms of time period as well, losses in equity markets?

A: My view is that regardless who would have won, the stock markets would have gone down. But, the market made a high a year ago at 2,134 on May 25, and then we went down and in January of this year, we dropped to 1,810 and then we recovered and made a new high at 2,193 on the Standard and Poor (S&P). If the market drops towards the low of this year, which is 1,810, the Fed will launch quantitative easing (QE)-IV. The Fed will support the stock market. The moment it drops 10-20 percent, they will support the stock market.

Monday, November 14, 2016

Long-depressed commodity prices are set to finally head higher for two key reasons, Marc Faber, the publisher of the Gloom, Boom & Doom report, told CNBC.

It all boiled down to the need for infrastructure, said Faber, who is also known as Dr. Doom for his usually pessimistic views.

"The need for infrastructure in Asia is huge. They have to build roads. You go to Jakarta, Manila, the infrastructure is a catastrophe," he told CNBC's "Street Signs," adding that to accommodate tourists, Asian countries needed to build airports and railways. "You cannot ship that many people by airplanes. There's no space."

The second reason commodity prices were set to rise was because developed markets were also set to boost their spending, he said.

"In the western world, they believe — I'm not saying it's the right belief — but the belief among economists and the neo-Keynesian and the interventionists is that monetary policy alone cannot lift the global economy out of its slow growth mode," he said. "So they have to go and build infrastructure and boost governments' fiscal deficits."

That was also set to send commodity prices higher, he said.

"This combination of infrastructure in emerging economies and infrastructure spending in the developed economies of the U.S. and Europe, in my opinion, will mean that inflation will actually surprise on the upside," he said.

When it comes to one particular commodity – crude oil - Faber also pointed to economic growth in emerging Asia as boosting prices, adding that oil could easily test $70 a barrel in the not too distant future.

U.S. oil futures were down 0.55 percent at $50.57 a barrel, while Brent futures were off 0.41 percent at $51.58 at 11:42 a.m. HK/SIN.

Friday, November 11, 2016

He said that there is another notable trade investors should be eyeing in connection with the Trump win.

"The obvious trade with a Trump victory is to own Russian and Kazakhstan assets — bonds and equities," Faber said. "That is the obvious trade for the simple reason that Mr. Trump has a more benign view of the world and respects the perspective of foreign leaders."

As for the Trans-Pacific Partnership, which Trump has notoriously opposed over the course of the presidential race, Faber believes it is off the table.

"But," he noted, "many Asian countries were not all that much in favor of TPP to start with ... so I don't think that it's a negative."

Faber said nowadays, Asia is "China-centric" — in other words, more dependent on the Chinese economy than that of the United States.

Trump's stance on China has been largely negative over the course of his campaign. His seven-point trade plan promises to bring trade cases against the Asian nation and accuses it of currency manipulation, among other claims.

The Republican won the office of president Wednesday morning after a highly contested and polarizing race against his Democratic opponent, Hillary Clinton.

Thursday, November 3, 2016

Most assets by traditional valuations are overpriced. Now are they overpriced compared to zero interest rates or negative interest rates? If you take the 10-year German bonds or the 10-year Swiss bonds or the 10-year Japanese bonds, you have no or negative yield. But you can buy equities that give you a dividend yield of 2 percent or more. Then you say stocks compared to negative interest rates are a bargain.

But they are not cheap by traditional valuation methods.

However, I think it’s dangerous for someone to say: “We all agree that it will end badly, so we keep 100 percent of our money in cash.” First, you have to decide which cash.

Number two, we don’t know what the time frame until it ends badly is. And in an extreme money-printing environment, the Dow Jones Industrial Average can go to 100,000.

It may likely not go up against precious metals, but it can go up in nominal terms endlessly. It’s not going to help the typical household. I have seen many hyperinflating economies, and in each case, the standard of living of average people declined.

That will be the case. If I were interventionist—which I’m not, and I do not support the interventionist—if I were a central banker and I said to myself the right policy now is to increase the negativity of interest rates, we go from 0.5 percent negative to 5 percent negative.

In this particular instance, the people and companies take the money out of the financial system and store it in cash in a vault.